NEW YORK (The Deal) -- Activists who have been battling for more than a year against management at CommonWealth REIT (CWH) won a significant victory Tuesday when shareholders voted in favor of removing the commercial real estate firm's board.
Corvex Management and Related Fund Management, who together own about 9.6% of CommonWealth's shares, said that holders of 81% of shares voted in favor of the removal, well above the two-thirds threshold the activists needed.
The funds have proposed a slate of candidates to CommonWealth's board, including billionaire real estate investor Sam Zell and Zell lieutenant David Helfand, and have proposed the two become chairman and CEO, respectively.
Newton, Mass.-based CommonWealth in a statement Wednesday said that as required it will inspect the consents and declare the results within five business days, announcing the formal results on or before March 25.This is the second attempt by the funds to remove the board. Corvex and Related had support of a large number of shareholders last year, but their effort was stymied after an arbitration panel ruled the activists had not followed CommonWealth bylaws. Corvex, which is run by one-time Carl Icahn protege Keith Meister, and Jeff T. Blau's Related have argued that CommonWealth's structure and its relationship with an external management firm run by CommonWealth founder Barry Portnoy and his son have been a drain on earnings and represent a conflict of interest. CommonWealth has countered that the activists are trying to gain control of the REIT without paying a takeover premium. Meister and Blau in a statement said, "We will immediately reach out to the trustees" to plan an orderly transfer. "The shareholders have exercised their rights and we look forward to working with the trustees in the coming days to arrange for an orderly transition process that best protects the interests of all shareholders," the executives said in a statement.